Expert Witness 'Drought' To Hit Lenders In 2008

Professional liability specialists at law firm Browne Jacobson are predicting a shortage of credible expert witnesses to defend against the raft of claims expected next year as the credit squeeze continues to affect financial and property markets in the UK.

Nik Carle, partner at the firm's Nottingham office said: "It looks increasingly likely that 2008 will mark a renewed period of recrimination and claims-making in the secured lending sector - and this will demand the use of experts to advise courts and litigants on the prudence, or otherwise, of past lending criteria.

"Come January, those post-party blues will be biting harder than they have for many years. The Council of Mortgage Lenders will have published its latest figures on repossessions by then and the outlook is bleak, to say the least."

Browne Jacobson is predicting that lending practice advisers will be particularly sought after in the New Year, as the pool of available expertise in that discipline is quite small.

According to the firm, it will be the sub-prime and impaired credit markets that will yield the greatest number of claims over the next 12 months. As more and more borrowers default on these loans, so the pressures will mount on lenders to maximise recoveries against their security.

Those recovery actions, whether they take the form of professional negligence or other claims, are bound to require some 'opening up' of lenders' internal procedures for challenge.

Carle continues: "One of the key features surrounding the next claims phase is the newness of the type of lending we have seen in recent years. Once that 'opening up' process begins, it will become apparent that there is no real guide available for what amounts to appropriate sub-prime lending practice and what does not.

In the 1990s, when we had the last flood of lender litigation, nobody was lending in quite the same 'easy' manner and accordingly, there is not much of a directly comparable track record to work from today. This is where the demand for good lending practice experts really...